Electricity Price Caps to be Removed

September 21, 2010

A revised deal agreed through Council of Australian
Governments (COAG), is due to set an aggressive timetable
for the removal of power price controls from the
remaining States currently engaging in Full Retail Competition
(FRC) in their electricity markets.

The Victorian market has been successfully operating without
price controls for a number of years now, with the price increases
that customers have seen in recent years really being driven by the
need to provide further investment back into the infrastructure and
electricity networks.

The proposal would mean that New South Wales (NSW) could see
price controls lifted by June 2012, Queensland by June 2013 and
Tasmamia by 2014.

Some consumer groups remain concerned that at times increased
competition, does not bring all the benefits which are
anticipated.

Choice director of campaigns
Christopher Zinn commented "But the experience of competition
hasn't delivered all consumers the best outcomes, and that's
because it's hard for people to compare what's cheapest - they can
be switched by door-knockers, the churn may not always be in their
interest."

Tim Wolfenden, Director of
MakeItCheaper.com.au says: "We
welcome anything that will increase competition and reduce the
price that customers pay for electricity and gas.

The government and regulator need to
recognise that misselling can and will occur via the door-knocking
industry, but that only really means that they need to be better
regulated. Customers themselves need to become better
educated when it comes to door-knockers, and be comfortable saying
'No' to them.

At the moment, price controls are
really stifling retail competition in New South Wales. The
sell-off of the three incumbent retailers by the government later
this year will help immensely, as will the careful removal of the
existing price controls."